Indian Oil, Nalco to get up to 49% in ventures with Nuclear Power

Indian Oil Corporation （IOC） and Nalco can each have up to 49 per cent equity in atomic projects proposed to be set up in partnership with Nuclear Power Corporation of India Ltd （NPCIL）, up from the 26 per cent stake offered at the outset.

NTPC Ltd, the third entrant in the nuclear sector, is already set to pick up 49 per cent equity in its joint venture projects with NPCIL. IOC is slated to partner NPCIL in setting up the proposed seventh and eight RAPS （Rajasthan Atomic Power Station） units of 700 MWe each, which are to come up by 2016. Nalco is being roped in as a partner for NPCIL's third and fourth KAPS （Kakrapar Atomic Power Station） units of 700 MWe each that are slated to be commissioned in 2015.

Jaitapur project

While the venture with NTPC could take up greenfield sites either in Madhya Pradesh or Haryana, the possibility of roping in the thermal power major for the imported Light Water Reactor-based Jaitapur project in Maharashtra could also be possibly considered, official sources said. NPCIL would hold the majority stake in each of these projects.

“IOC has communicated to us that it will eventually acquire 49 per cent stake in the proposed venture （RAPS 7 and 8） entailing an outlay of Rs 12,600 crore. In the first phase, IOC will invest about Rs 960 crore for a 26 per cent stake for setting up the two 700 MWe units,” an NPCIL official said. He said Nalco was keen to start with 49 per cent in the two KAPS units and that a 49:51 equity structure, on the lines of the NTPC venture, could be decided for Nalco as well.

NPCIL had signed a memorandum of understanding with both IOC and Nalco in November 2009. The final joint venture agreements are expected to be signed by NPCIL with the two public sector firms shortly, officials said. With NTPC Ltd, NPCIL has already signed an agreement in April for incorporating a joint venture firm to set up nuclear projects in the country.

IOC, NTPC and Nalco are being roped into the nuclear sector as part of the Centre's strategy to tide over the paucity of funds and ramp up execution capability for new atomic units by roping in cash-rich public sector undertakings. This is being done as an alternative to letting private sector players into nuclear plant operations.

NPCIL now operates 19 reactors with a generation capacity of 4,560 MWe. “Of the 20,000 MWe target for 2020, NPCIL — which has a surplus of Rs 12,000 crore, including cash reserves — can manage only about 10,000 MWe through its own financial resources. Hence, funding from other sources is needed to supplement NPCIL's efforts and the best candidates are PSUs, especially those in the core sector with strong financials and cash flows, an official said.